Apple Locks Down iPad App Market, Opens Up Legal Woes

Apple is exerting more control over content purchased for and available on its popular iPad by enforcing rules that require magazine, newspaper and e-reader publishers to sell all content through iTunes.

As of March 31, apps that do not take payments through its iTunes store will be rejected. Although Apple has long required app publishers to sell subscriptions via Apple's "In App Purchase API," some publishers -- notably, The Wall Street Journal andThe Financial Times -- sold them outside Apple's digital store.

"We have not changed our developer terms or guidelines. We are now requiring that if an app offers customers the ability to purchase books outside of the app, that the same option is also available to customers from within the app with in-app purchase," said Apple spokesperson Trudy Miller.

What has changed: Apple launched a new subscription model with Rupert Murdoch's iPad publication The Daily, which costs $0.99 per week or $40 a year. This non-refundable subscription model with automatic renewal -- currently only available for that publication -- will be expanded to other publications soon. Apple gets a 30% cut from iTunes sales and subscriber information.

For some publishers, these changes are welcome.

"The Daily is, in reality, is a step forward for the whole system. It was Apple's payment system that really helped the app store and the mobile app environment take off," said Aaron Watkins of PR firm Appency, whose clients include iPad apps forThe National Geographic and Popular Science. "The addition of a trusted and standardized subscription model will only benefit the overall iTunes app environment."

Still, Apple's strong-arm approach will likely lead to further legal tussles with the EU. Belgian economy minister Vincent Van Quickenborne urged his country's antitrust authorities to investigate whether Apple is abusing its dominant position with the iPad.

Carlo Piana, a lawyer who worked on the EU case against Microsoft in the U.S., says that Apple's enforcement of in-app sales makes a strong argument for an anti-trust case.

"To me, this is an obvious abuse on the part of Apple. They are exploiting the fact that apps not in the iTunes store don't have a chance on the market," Piana said. "I would say that the doctrine of essential facility is applicable here, I think their actions are illegal."

Troubles over in-app purchases on iTunes don't end with magazine content. Parents are complaining to Apple over kids accidentally running up credit card bills with in-app buys while playing free games from iTunes. In one such game, Smurfs' Village, tots complete the land of the small blue creatures by buying extras with real-world charges, like a wheelbarrow of Smurfberries for $59.99.

Apple did not respond to requests for comment, but regularly refunds these purchases. Still, one upset dad whose daughter ran up his bill recently launched a Facebook group to halt these "credit card bait apps."

"I have taught my kids to avoid buying anything," said Tobias Feldt. "It worked until the Smurf game, which got my oldest daughter to spend quite a lot of money without her even noticing it. This is an unhappy, unfortunate situation for all - my kids, me and Apple."